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Initial investment was $450,000 to buy the equipment.In the second, third, and fourth years, the company net cash flow is expected to be positive, $145,000, $210,000 and $580,000, respectively.The financial rate was rf = 10% and the reinvestment rate rr = 12%.

The amortization rate for the equipment is 20% per year.

Question : Assess the feasibility of the investment by using different methods. Interpret the result obtained by different methods. Make a decision whether you want to make this capital investment.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92759485

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